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thanks for being with us. >> guest: thank you. >> now from london we sit down with mr. lamb's lady author of four nonfiction books including poor pretend and the cost of any quality. this is about half an hour. >> joining us this week on book tv from london is stewart landsley who is a visiting fellow with the townson center for international poverty research. professor, what is the center?
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>> guest: it is an institution and after an academic named peter and it really we invented the nature of poverty research. and he was probably the cheek -- chief architect rather than the absolute concept and in fact he died unfortunately a couple of years ago and the center where he was working was sort of named after him, so it was in fact a sort of social policy institute that has now become the poverty center. >> host: you published a book called the cost of any quality three decades of the super rich and the economy. are we living in a time of economic inequality and is that
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important? >> guest: we are indeed the gap between the rich and the poor stands at the mere historical levels, not just in the united kingdom but even more so in the united states and across the majority of the rich world. these countries have been getting much more unequaled since the 1970's and in some countries particularly the united kingdom and the united states now back to the kind of income the gaps that we saw in the pre-war iraq. i mean in the united kingdom, we are back to the sort of levels of any quality of the 1930's and in the united states we are back to inequality of the 1920's. so this is a remarkable switch. we have a long period of equalization. the great leveling as historians have to find it in the post war era to the 1970's and then that whole process has gone into reverse. we have simply gone backwards to where we were eda, 90 years ago.
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>> host: some would call that leveling the redistribution. >> guest: some of it was a redistribution but the main driver of this process of equalization in the 1950's and 60's was a reformed economic system. the model capitalism that existed in the 1920's and 1930's was an unequal model of capitalism and took on a very different form so some of the things that drove the process high taxes on the rich, a more profound and effective welfare state, but a lot of it was to do with the way the business organized itself so what we have -- perhaps the most sycophant characteristic of the post for capitalism as the fact the way in which the economy was
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distributed between profits on the one hand, and wages on the other became much more equals of the process of growth was distributed much more even between the interest of business and the interest of the work force and i think that was perhaps the most significant driver of that process and what has happened since the 1970's it has gone into reverse. we have moved back to a system with gains of growth have been increasingly colonized by the big business on the one hand and the small group of business finances on the other while the rest of the working population have had a smaller and smaller share but that is what has been driving the changes rather than the reverse in the redistribution. >> host: is that in - that the profits have not been emphasized? >> guest: well, this of course
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is highly controversial. the economic orthodoxy of the last 30 years is the increasing profit share would be a good thing for economies. it would drive more entrepreneurialism and would meet companies more efficient and this would lead to a bigger cake from which everybody would gain a. this is the trickle-down theory that if you give more to a sort of a handful of entrepreneurial business leaders, then everybody would benefit. but the evidence is these theories haven't worked in practice. what we have had i think is a kind of this year economies essentially the american and the british economy in particular have them treated like a laboratory in which these theories have been tested. so, we have 100 years of data. 30 or 40 years we have
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equalization. we have had 30 years that we've had the opposite. so we can look at the impact of the two period on the economic performance. and the evidence is is the latter model capitalism that has been less successful on every major indicator of economic performance compared with a post war era so we have had slower growth since the 1980's and lower productivity and lower levels of business investment and we have had high levels of unemployment than the relative stability that we had in the 1950's and 60's. so come on a cost-benefit analysis, you know, the period of the unequal capitalism has basically coming you know, is the need a failure. so the experiment has not worked. >> host: who pushed the experiment in the two countries? >> guest: the experiment --
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the idea that you should have free markets and less state regulation and as a part of that you should allow the rewards of the top and a bigger concentration of wealth that the top that really came out of a small group of new right thinkers immediately after the war. for 20 or 30 years this is quite a small group. maybe ten people. and these people basically were arguing for more markets but they were more or less ignored the and during the crisis of the 1970's their ideas started to become much more seriously taken, and their ideas were, although these ideas initially originated in a sort of new right with people who believe in markets they've been taken up by the more centrist economists perhaps the most famous ones as an american economist who wrote a book called the quality, efficiency trade off they would
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argue you can have more efficient economies or equal economies but you can't have both and that idea was taken up by ronald reagan in the united states by margaret thatcher in the united kingdom and they started putting in practice policies the would lead to the more unequal societies but gradually those ideas came to be accepted pretty well across the political spectrum by the moderate left some democrats and the united states bought into that idea. the effectively accepted that argument as well and the crash started to be challenged. >> host: the cost of your book the super rich and the economy is that this inequality caused the crash, connect?
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>> guest: what happened in the 80's and 90's is that more and more, we have this falling share of national act going into the wages and the rising share going to the profits and this concentration of income they may be 10,000 people around the world accumulating these huge sums of money. but this does, this sort of in balance if you like creates an economic fault line and then eventually lead to collapse and there are two particular ones. the first is what happens is the demand in the economy because if you squeeze wages and if they start falling behind the level of output, there is a sort of demand gap. there isn't enough demand for the consumers to keep the society is going.
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and indeed if those had been allowed to continue, then economies would have included so they have to be kept alive. the way they were kept alive is by pumping in debt. so what we have is between the sort of coming you know, the early 1990's and the mid 2000's we have a great surge in the private debt in both the united states and the united kingdom rising to historic levels and those levels of debt are unsustainable and eventually they will explode and the same thing happen to the reverse was happening at top the had to borrow to keep that output if
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they spend on the investment or the economy then we might have been able to sustain that kind of imbalance but of course they couldn't. what happened is this buildup of hot money that circulated around the world in research on the highly profitable returns and most of this money not spent in areas that were not productive so they got spent on the property speculation scum on the commodity speculation, perhaps above all on the business restructuring. so we have a huge merger and acquisition boom in the united states and in the united kingdom. what all this did is increased asset values and house prices and property values. it increased the values of business so you have a stock market surge in about 2,003.
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and all this isn't based on the real foundations. the fact that productivity was rising and the economy was getting efficient they just reflect a concentration of hot money so you have the two buildups that eventually led to the crash. >> host: has there been a rise in poverty in the last ten years or so? >> guest: well, and of -- there has been a rise in poverty in fact it's doubled since the 1986. it rose through the 1980's and 90's and sort of leveled off about 2000 in britain. the reason for that is the new labor comes a lot of spending into supporting at the low pay and a demand benefits much more generous and the introduced the minimum wage comes the poverty levels have sort of little off but they started to pick up
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again so during the crisis of the last two or three years poverty has risen again so this rose in the 80's and the 90's and leveled off and balance level again and the united kingdom has been doing some work on the poverty survey that we've been doing which shows poverty levels now are about slightly more than double bill will fall of 1983 and 5% up between five to 10% up over the late 1990's. >> host: one of the policy discussions were the dates was being a nation of givers or takers and 47% are receiving some sort of governmental assistance. isn't that part of what you are arguing about the inequality?
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>> guest: 55 ellen degeneres payment systems like the tax payment system in the united kingdom and the united states and you gave large tops to the low-paid workers that does raise their income but it's not a sensible way to run the economy. what's happened in both the united states and the united kingdom is that the proportion of the work force that are low paid has doubled. the united states and the united kingdom top the global table for pay. interesting enough, there is germany that's had a low pay policy the last decade. either you can allow the poverty rates to rise more by not subsidizing those on the low pay or you can subsidize them but that of course has burdens of itself because it expands bill
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of all of welfare payments and spending and these increases in taxes and reduces the incentive to work because it means you're not better off on the welfare payment than you are on work so it isn't a sensible way to run the economy and the reason why we have had these big jumps in low pay is for the reason i outlined earlier there's been a squeeze on wages and the share of output in both the united states and the united kingdom has fallen sharply over the last 30 years. there is money going. most of the squeeze in the fall has been concentrated on the weight of distribution roughly the bottom flared. that is basically what has been happening. the solution to the crisis, the economy's will only be sustainable in long run if we find a solution to this in
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balance that we need to have more of the cake and and that needs to go to the work force, slightly less to the profits and much less to this rooftop group at the top that essentially are not -- if they are wealth creators if they were like the 19th century robber barons which were much maligned, at least the robber barons created wealth and built companies and created products. they might have done it any way that was highly dubious and they might have been, you know, pretty vicious to their work but they created sustainable business that lasted a hundred years. most of those people at the top both in the u.k. and the united states are not traditional entrepreneurs of the creative new businesses that created new product and made businesses more efficient, the finances and people who have made money by the manipulation of the finances
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and the balance sheets so what they have been doing is redistributing the wealth to themselves so they have been grabbing a bigger share. that is why we are in this mess because we build an economic system that rewards -- that gingrich is the few but impoverished is the majority and that of itself is not a sustainable economic system. >> host: you are watching book tv on c-span2 from london joining us this week is stewart lansley, the author of "the cost of inequality three decades of the super rich and the economy among other books. what specific policy descriptions then would you offer to as you say increase the size of the cake for the working? >> guest: there is no magic bullet and simple solution to this problem. we have had 30 years of a
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juggernaut that's been moving money away from the top so it's not possible to reverse that overnight and i think that history is interesting here because we have had two examples over the last 100 years where economies have changed course quite dramatically. the first was in the 1930's, the response to the great recession of the 1930's was a completely different model. we had a sort of regulated keynesian warfare model across the world which replaced the more market economies that generated the crisis of the 1930's so we had a big switch. we had a similar switch in the 1970's during the global crisis of that decade when the sort of model gave way to the current
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marking model. and what we need is another switch. now, the interesting thing is that in the 1930's and 1970's, the crisis did give way to new models and the evidence at the moment is what we have is more of the same. although there has been a lot of talk by global leaders about the need for change, president obama is on the record saying that inequality is the defining issue of our time and the head of the imf said that inequality is corrosive and many of the world leaders say we have to do something about inequality. what we have not had is anything more really than tinkering. we've had a bit more regulation of finance. we had president obama's call for the minimum - wage and more taxes on the rich and in the united kingdom we had a little
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bit of tinkering on the bonus payments and the corporate governance, but this does not add up to a major shift and isn't going to make very much difference and indeed what happened to the crisis is the best evidence is that inequality has grown. during the 1930's, the rich, the super rich took a battering, the wealth shrink and the political climate became very much colder. that hasn't happened in this crisis so in a sense the rich have gotten richer. we know the growth of the last two years, 90% has gone to the top 1%. we are continuing the trend. something similar has happened in the united kingdom. the global figures, the billionaire has shown the number of billionaires' in the size of their wealth has increased since
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2008 while incomes of the bulk of the rich countries have actually shrank. if we were to solve this problem we need a fundamental shift that we had after the war in the 18 -- 1980's. >> host: do you consider yourself a keynsian? >> i consider myself a keynsian and -- i think this is a demand-wide crisis and not supply-lead crisis. it is twofold. first, there's been a collapse in demand, and the way to get back on track is to boost demand for business investment and public spending and higher wages. of course we are doing the opposite. business investment is falling, public spending is falling and
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wages. that is the reason we have this paralysis in the crisis is the demand is falling. we also need this idea of supply-side reforms which is very much a market right wing idea to change the institutions and labor markets to give more power to business to reduce taxes these are the sort of reforms that have been the last 20 years those are the sort of reforms we fought on the supply side so we have a long set along the policies to boost the demand in a new set of supply-side measures. if those are things like orientating the tax system so it's much more effective, dealing with tax havens, complete change in corporate governance and of the way the big business is run. a complete change in the
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fundamental goals of the big business. we need a rebalancing of bargaining power between the business on the one hand and the labour force on the other. both in the united states and the united kingdom a portion of the workforce is represented by the trade unions in the collective bargaining. in the united states it is 7% and 40%. so 85% of private sector workers wages are negotiated without the representation and in the united states it is over 90%. we have completely distorted our system of power and the democracies cannot survive if you take that -- if you simply leave whole sections of the society without any kind of the waste or say in the terms and conditions of the work. so that is difficult to achieve and to see how we can turn these
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around but it seems to be essentials. we have created what wall street finance is have called plutocracies in the economies in which economic power and political power, because they go hand-in-hand have been concentrated in this tiny grooves, and often this is more powerful than our political leaders. the presidents and prime ministers are still to some degree dancing to the tune of wall street and the city despite their role in creating the crash and that is because of that concentration power. you cannot have those concentrations of power and have governments that are free to take the sort of tough decisions they're needed. so we need reforms on a number of area much more than the kind of tinkering that people are talking about.
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>> host: prior to the decades of the super rich and the economy, stewart lansley wrote the book lundograd from russia to cash. is there a lot in london and if so, what has been the effect? >> guest: there is a huge volume of russian money in london much more than in the united states. the russian oligarchs, the wealthy billionaires' who became wealthy overnight in the economic reforms of the 1980's and 90's a huge portion of the guelph has come out of russia and parts of the old soviet union that isn't unique to russia and landed in london, and that money -- we are talking very large scale indeed. it's not just the russians that
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similar things are happening with nigerian money come and london has been the main source for the last 15 years. >> host: why? >> guest: there's lots of reasons. it's partly because london is a many tax haven. we treat money that comes into london -- we give them special tax privileges. the british governments have been to over backwards to get this money because they believe that it would actually help the economy. so there has been an international race to get this money. interestingly enough, the united states has never tried to do this. i know i say this makes it much more difficult for the russian money and the united states have stopped a number of russian oligarchs from migrating to the states and indeed parking their money there for various reasons.
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but the effect of this money has been to some extent positive because clearly when you bring that amount of money and act like an economic shock, and so some of that money is being used to create new businesses, to create sort of restaurants, businesses for security commit huge increase in demand, but where services for expensive restaurants, and to some extent some people have talked about branton becoming the carrier for the world's super rich. some of that has fueled the economy if you like but the majority of at has gone into activities that have been destabilizing. so, a huge amount has gone into property so you have mass property booms in the center of london, which have filtered out
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and have helped create the huge property boom from 2000 which ended in collapse. so some of the money is destabilizing in that way and a lot of it has been in the financial like to the these that have been highly damaging, the sort of things i was talking about earlier on they've gone into private equity deals and a lot of it went into the mergers and acquisitions in the huge boom in the united kingdom a lot of that was financed by foreign money, and all that so some of that money contributed to this process of economic destabilization and certainly contributed to the big booms and values that eventually burst in 2008. >> host: if viewers would like more information or to contact you what is the best website for them to go?
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>> guest: i do have a web site which is that's probably -- if they get in touch with you, then i mean you have my e-mail address. so if anybody does want to get in touch. it wouldn't be the first time. >> host: for the first half hour from london we have been talking with author stewart lansley uzi research visiting fellow at the center for international poverty of the university of bristol and the author of the book londongrad and the most recent book the cost of any quality three decades of the super rich and the economy. he has been our guest on book tv. ..
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>> as you read the book this month, post your thoughts on twitter with the hash tag btv book club, and write on our facebook page, and then on june 25th at 9 p.m. eastern, join our live, moderated discussion on both social media sites. and if you have an idea for next month, send your suggestion on which books you think we should include in our online book club via twitter, facebook or e-mail at >> you're watching booktv on c-span2. here's our

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CSPAN June 16, 2013 6:30pm-7:01pm EDT

Stewart Lansley Education. (2013) BookTV in London Stewart Lansley. New.

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